Cotton Market is In Stalemate

    It is already the late October, “the sliver October” has already gone with the autumn wind. Generally speaking, the cotton market is in stalemate, and the cotton price sway around the purchase and reserve price, expecting a favorable turn of market.     

    By the end of August, the cotton price once dropped bellows the state purchase and reserve price, but after entering September, under the powerful support of State purchase and reserve policy, the cotton market is gradually being steady. In October, influenced by the low demand and tight capital, the weak cotton market gets into the downside orbit again and generally in stalemate. 

    In terms of specific cotton price, the CC index was 19,432 Yuan/Ton by Oct 28^th, which dropped 520 Yuan/Ton compared to the beginning of the month. The quotation of unginned cotton in Korla was 8.5-8.6 Yuan/ Kg, which dropped 0.3 Yuan compared to precious period. This price didn’t reach the expectation of cotton farmers and the transaction is limited. It is said that a big factory in Shandong adjusted lint price to 300 Yuan, now the 3 level cottons price was 19,500 Yuan/Ton, 429 level cottons price was 18,700 Yuan/Ton.   

    Fundamental Aspect is not Changed .   

    The fundamental aspect of current cotton spot market is not changed, and the output increased, but influenced by the downstream low demand, the yarns and fabrics stocks were still high. The price of in a part of areas has dropped bellow 19,800 Yuan/Ton, which is the new cotton purchase and reserve price. In order to stabilize cotton production, operators and market expectation, and protect cotton farmers’ benefits, the government began to implement cotton temporary purchase and reserve policy in 2011

    The standard lint price of cotton temporary purchase and reserve policy in 2011 was 19,800 Yuan/Ton, and the execution time of annual cotton temporary purchase and reserve plan was from Sep 1^st, 2011 to Mar 31^st, 2012. The cotton price dropped continuously and the downside trend could be changed only by the support of state policy. Further more, because the tight capital chain of textiles factories, leading the low demand of cotton, and the cotton price is difficult to rise. 

    China October manufacturing purchasing manager’s index increased above the prosperity index, which means the manufacturing industry expand actively and its demand of raw materials increased. In addition, the market is optimistic about the agreement which reached in euro zone leader’s summit. The economic factor stimulated the market and pulled the stock market and bulk commodity price. ICE cotton future price followed and increased slightly, but comparing with other varieties, the ICE cotton futures rebounded slightly, impacting by the low demand.

    In the gold September, supported by the state purchase and reserve policy, cotton price increased slightly for the time being. However, because the state macro economic policy doesn’t loose and the capital of small and medium textile factories is tight, the cotton demand is still low. Influenced by the state purchase and reserve policy and low demand, the cotton market is in stalemate, so it is estimated that the cotton price will still shake around purchase and reserve price.